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California Association of Private Postsecondary Schools

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Higher Education For All. May 14, 2014.

The U.S. Department of Education has claimed that the “gainful employment” regulation is about saving taxpayers money, but the magnitude of the burden that the Department has imposed through it belies that goal. In reality, the regulation will be extremely costly to students, institutions, and taxpayers, but this has been ignored by the Department as they recklessly target private sector institutions and the students they serve.

Dan Goldbeck of the American Action Forum (AAF) found that the “gainful employment” regulation was the “most burdensome non-tax rule to date in 2014.” At 841 pages, the regulation represents $236 million dollars of annual regulatory costs and a paperwork burden totaling 6.94 million hours.

The cost levied by the Department does not only apply to community colleges and private sector institutions. According to Goldbeck, about one third of the increased paperwork burden applies to their students, as well. He also notes that the Department itself acknowledged that students may face higher commuting costs, tuition, and fees after they are denied access to the programs of their choosing.

Not mentioned by Goldbeck, but noted in research from Jorge Klor de Alva and Mark Schneider from the Nexus Research and Policy Center, is that private sector institutions save the public money by educating students that public institutions and community colleges can’t. They found that if all the students who had attended private sector institutions in California, New York, Ohio, and Texas between 2007 and 2012 had instead attended public schools, those states would have needed to provide an additional $8.4 billion dollars for education funding.

The “gainful employment” regulation is a triple threat, in terms of cost to taxpayers, the economy, and students. The regulation will cost hundreds of millions of dollars annually and impose significant time and paperwork burdens on students and institutions, it targets a sector that actually saves taxpayers billions, and it will deny access to postsecondary education for those that stand to benefit the most from it. It seems like the Department is accomplishing the exact opposite of what they set out to do.

Sen. Lamar Alexander got it right when he said, “To take 841 pages of regulations to define two words in the higher education law shows exactly what is wrong with Washington.” The inefficient rulemaking that the Department of Education has embarked upon is misguided and highly burdensome to institutions, students, and ultimately taxpayers.